The Multifamily Opportunity Hidden in America’s Changing Demographics

If you're investing in multifamily real estate, there's a question worth asking as you start analyzing cap rates, renovation budgets, or what is the current market rent: 

Who is going to rent these apartments five, ten, or fifteen years from now? 

After all, at the end of the day, it’s the people in these apartments that pay rent. There are some fascinating demographic trends that are quietly reshaping where those renters will come from. These trends even give hints into what kind of housing renters will need. 

Consider this: in July 2025, 17.6% of Americans between the ages of 25 and 34 were living with parents or grandparents, according to John Burns Research and Consulting's analysis of U.S. Census Bureau data. The long-term average from 1997 through 2025 was just 13.6%. 

That's a pretty big difference. Twenty-five years ago, moving out of Mom and Dad's house was practically a rite of passage. Today, it increasingly looks like a luxury. Housing costs have risen. Mortgage payments have become more expensive. Student debt hasn't exactly disappeared. And wages haven't always kept pace with the cost of establishing an independent household. So millions of young adults are delaying household formation. 

Here's where it gets interesting for multifamily investors. These young adults are not necessarily going to live with their parents forever. At some point, many will move out, form households, get married, have children, or simply decide that they've had enough of sharing a bathroom with their parents. That represents a potentially significant pool of pent-up housing demand. 

There's another clue hiding in the data. In July 2025, 5.7% of Americans aged 25–34 were living as an additional roommate, compared with a long-term average of 5.3%. That may not sound like a massive difference, but it tells us something important about how younger adults are responding to housing affordability. They're adapting. Instead of renting a one-bedroom apartment alone, two people can split a two-bedroom. Instead of immediately buying a house, a young family may rent for several more years. Instead of paying top dollar for luxury housing, renters may prioritize space, functionality and affordability. Which leads to an interesting conclusion: 

The future multifamily opportunity may not be luxury apartments. It may be boring apartments. 

I'm talking about well-maintained Class B properties with functional floor plans, reasonable rents and plenty of two- and three-bedroom units. Think about the renter pool for a typical 2BR or 3BR apartment. It could be a couple. It could be two roommates. It could be a young family. It could be a single parent. It could be someone who simply isn't ready, or able, to buy a house. That's a pretty broad customer base. 

Let’s shift gear and talk a little bit about geography. The data shows that the population of children under five declined in many parts of the country between 2021 and 2024. However, several states in the Southeast—including Tennessee, North Carolina, South Carolina, Georgia, Florida and Texas—experienced comparatively stronger growth. 

This is important because four-year-olds generally don't relocate themselves. When you see growth in the population of very young children, you're looking at evidence of something larger:  

Families are moving there. 

These are families that need housing, preferably housing with two or three bedrooms. These families are looking for areas near jobs, schools, shopping and services. They desire housing that doesn't require a household to spend half its income just to keep the lights on. 

Then there's migration. The great Sun Belt migration story has become more complicated. Markets such as Florida, Texas, Atlanta and Phoenix experienced tremendous population inflows during the pandemic boom, but many have since seen domestic migration slow considerably. Yet according to the data presented, four metros continue to stand out: 

Raleigh-Durham, Charlotte, Nashville and San Antonio. 

These markets continue to attract meaningful domestic migration. For multifamily investors, that's a pretty useful starting point. But—and this is a very large "but"—a great market doesn't automatically make a great investment. If everyone knows Nashville is growing, investors may already have bid Nashville apartment prices to the moon. 

That's where I think the smarter strategy begins. Rather than automatically buying in the hottest metro, look at the markets surrounding it. If Nashville is attracting people, what happens to Murfreesboro? Lebanon? Clarksville? Columbia? Gallatin? If Charlotte is booming, what happens to Concord, Gastonia or Kannapolis? If Raleigh-Durham is attracting households, where are those households going when they can't—or don't want to—pay Raleigh-Durham prices? 

The opportunity may be to capture the growth of a major metro without paying the full price of the major metro. That's why I'd be looking for Class B multifamily in the Southeast, particularly properties built roughly from the 1980s through early 2000s, with a heavy concentration of two- and three-bedroom units. 

I'd want strong employment fundamentals, reasonable population growth, limited new apartment supply and rents that are still affordable relative to local incomes, and I would be very careful about underwriting rent growth. I don't want the deal to work because I assumed rents will increase 3%+ every year for the next five years. That's not a business plan. That's a wish with an Excel spreadsheet. Instead, I'd rather buy at a sensible basis, improve the property, operate it better, control expenses and achieve modest rent growth. 

The demographics tell me where to look. The property tells me what to buy. The underwriting tells me what to pay.  

America's housing market is changing. Young adults are forming households later, roommates are becoming more common, and families are increasingly concentrating in select Southeast markets. For multifamily investors, that creates an intriguing opportunity, but not necessarily to chase the hottest market or the newest apartment building. The opportunity may be much simpler: 

Find the places where people are moving, then provide the kind of housing they can actually afford. 

In other words, don't invest in the demographic story. Invest in the housing shortage created by the demographic story.